Are you considering selling your luxury investment property? One of the most important things you can do to position your investment property in such a manner that it will sell according to the current market, and not languish as time goes on, is to price your property appropriately. But how do you determine the appropriate price for not only an investment property, but one of the luxury caliber? You start with determining the true market value of your property and you can do this with the help of an experienced, knowledgeable real estate professional.
First and foremost, you need to base all your decisions on the state of today’s real estate market. The current real estate market is the one that matters. Not the one from five years ago when sales were hot and prices high. Not the market two years ago that started to get shaky and take a dive. No, the market from a year ago doesn’t matter either, because the market is always in a state of flux. The only market that should concern you is today’s real estate market because within that market is your competition.
Which leads you to the next thing you need to do in order to determine the true value of your luxury investment property – you and your real estate agent need to look at your current competition. The competition is what is for sale on the market, that other buyers would look at – the other properties that are similar to yours in size, amenities, price, location. If your property is a single family home in Makena with a gorgeous ocean view, then you would hardly compare your property to a one bedroom condo in Wailea. The size is obviously different, the amenities will likely be different and so on. So the price would not be comparable. Your real estate agent will need to find similar properties that are truly similar, not just “everything” in the general area of your property. Your agent will select the comparable properties that a given buyer would look at while also considering your property, a sort of comparing apples to apples approach.
Keep in mind, the true market value is based on actual competition currently in existence. So, if your neighbor Harry tells you in confidence that he plans on selling his condo next door for a ridiculously low (or high) price in the coming months, it really should not be taken into consideration. Because for the time being, it is not on the market and therefore, not your current competition.
Another thing to evaluate is the current financing available to buyers. Lending guidelines have gotten tighter. It’s not as easy to borrow money as it once was for a home, whether it is luxury or not and whether it is an investment property or not. It’s just gotten tighter all the way around. So the buyers who might have just barely qualified for a loan by the skin of their teeth may no longer qualify. So when you price your property you need to think about those prospective buyers and price it in a manner that makes it accessible to more, rather than fewer, potential buyers.
Everything, of course, is based on your location and price, compared to the competition in the current market. A home in Idaho will not be priced the same as a condo in South Maui. And while a townhouse in New York may be in the same price range as a home in Wailea, a real estate professional would never use one to prove the true market value of another. Because it’s all based on what is currently going on in your local real estate market – the competition, the financing and the trends.
Your true market value is not based on what you paid for the property when you bought it. And it isn’t the amount that you currently owe on the property. True market value isn’t predicated on any dollar amount that you need to see after a sale is said and done. And true market value isn’t based upon your desired profit.
No worries!! The right real estate professional, an area expert and one with expertise in luxury properties can evaluate everything. He can look at the current market and the current comparable homes for sale. And he can also look at current financing and economic conditions. From all of this, your real estate professional will be able to determine the true market value of your luxury investment property and discuss with you how to price the home and place it in a position to sell!
Volker Weiss – Maui Realtor(R/S) specialist focusing on Makena Surf. Make your vacation last forever, check out Wailea Real Estate. For immediate help call VW directly at 888.572.6888
[tags]Makena, Wailea, Makena Surf, Oceanfront, Beachfront, Luxury, Investment, Real Estate, Finance[/tags]
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